Senior taxman played 'gamekeeper and poacher'

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Nick Petroulias, right, outside Darlinghurst Supreme Court
yesterday, where his trial began on charges of defrauding the
Commonwealth of tax revenue.Photo: Jon Reid

Former assistant tax commissioner Nick Petroulias yesterday was
accused of being both gamekeeper and poacher when, from 1997-99, he
issued about 70 private binding tax rulings.

Petroulias, 36, is accused of defrauding the Commonwealth of tax
revenue as a result of the rulings, which covered a number of
complex tax schemes used by taxpayers. His Supreme Court trial,
which began yesterday and is expected to take six months, will call
39 witnesses, including the tax commissioner, Michael Carmody.

The case will focus on several sections of the Tax Act,
including anti-avoidance provisions.

Petroulias, a lawyer, has pleaded not guilty to charges of
putting Commonwealth revenue at risk by the dishonest issue of
private rulings, benefiting from the issue of rulings by receiving
profits from a company to whom he issued favourable rulings, and
publishing unauthorised information to an associate.

Prosecutor Peter Hastings, SC, alleged Petroulias used his
position as a senior tax officer to obtain information on tax
schemes that exploited loopholes in superannuation schemes and
fringe benefits tax.

He allegedly passed on information obtained from promoters to
Richard Morgan and Productivity Incentive Corp, a company in which
Petroulias is alleged to have had an interest, unknown to the Tax
Office.

Petroulias had a gross conflict of interest because he was
devising and selling tax schemes at the same time that, with his
tax hat on, he was issuing rulings to taxpayers that he had himself
helped design, Mr Hastings told the court. At the same time, rival
promoters were receiving adverse rulings for similar schemes to
those marketed by PIC.

"And he was receiving a share of the profits from the sale of
the schemes, which is a further aspect of his dishonesty," Mr
Hastings said. "In acting partially in handing out rulings, he was
in gross breach of his duty."

The case was very complex, Mr Hastings told the court.
Petroulias' conduct, he said, was not like someone holding up a
bank for a few minutes, but someone who acted dishonestly over an
18-month period.